The Democratic Party became a liberal party largely through the "New Deal" policies of Franklin Delano Roosevelt during the Great Depression. Before FDR, "laissez-faire" or "free-market" policies were the only policies acceptable to America's ruling elites. FDR's New Deal policies used government spending power to create jobs for the masses of unemployed, and used payroll taxes to provide retirement security through Social Security. FDR also created regulatory agencies like the Securities and Exchange Commission (SEC) and the Federal Deposit Insurance Corporation (FDIC) to avoid another financial crisis.

FDR's liberal policies were supported by Democratic and Republican administrations until Ronald Reagan began a conservative counterattack against FDR's policies in 1981. After 8 years of Reaganism, conservative Democrats began embracing the Reaganite assault on liberalism, and called themselves "New Democrats" to distinguish themselves from traditional FDR-inspired liberals. These "New Democrats" drew support from large corporations that wanted a return to "laissez-faire" policies to get out from under regulations.

Under the leadership of Bill Clinton, the Democrats created the Democratic Leadership Council to craft a clear neo-liberal doctrine for the Democratic Party that became enshrined as their main policy. Promising to adopt these policies, Bill Clinton won widespread corporate endorsement as the candidate for the Democratic Party in 1992.

The same policies of neo-liberalism are now at the heart of both political parties. Both are committed to profit maximization for the tiny elite that owns the major companies and the places we work. In the present crisis, this capitalist elite is not reinvesting to rebuild the U.S. economy. At present, big business is sitting on $1.5 trillion. It refuses to invest in productive jobs, yet it demands massive cutbacks in Medicaid and other social services.

This takes us to the main problem of our time. Capitalism can't continue to grow the economy. It has choked on the massive debt bubble it has created. It is now turning inward to take back the gains won in the past by workers. In order to become profitable, it is demanding we reduce the share of wealth we as workers get.

The Financial Times of London documented three main trends that are devastating the living standards of working people in the U.S. First is a longer-term decline of U.S. capitalism since 1973. In that time, the annual income growth of the bottom 90% has been flat while the income of the richest 1% has tripled. Second is the fact that this decline has sped up in the last decade. Even during the boom from January 2002 to December 2007, the median U.S. household income fell by $2,000.